Tejas Appraisal Company has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) The appraisal process is an evaluation that leads to an opinion of value. This opinion or estimate is arrived at using a formal method that generally utilizes three "common approaches to value". One of the methods in use is the Cost Approach, which finds what it would cost to restore the improvements to the property, minus depreciation and physical dilapidation, plus the land value. Another of the methods is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close proximity which have recently sold. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a home. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to find the market value of a property based on what an investor would pay based on the income produced by the property.
What does an appraiser do?(Back to top) An appraiser generates a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers show their professional analysis in appraisal reports.
Why would I request a real estate appraisal?(Back to top) There are many reasons to purchase an appraisal from Tejas Appraisal Company with the most common reason being real estate and mortgage transactions. Some other reasons for getting an report include:
How is an appraisal different than a home inspection? (Back to top)The appraiser is not a home inspector and does not do a complete home inspection. The purpose of a home inspection is to investigate the structure of the house from foundation to attic. For the most part, a home inspection report will discuss the amenities and the necessities of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Back to top) To be blunt, it's night and day. The CMA depends on indefinite trends in the market. Appraisals use similar sales which are verifiable resources. Location and construction costs are also important in an appraisal. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the biggest difference is the person creating the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent party, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.
What does the appraisal report contain? (Back to top)Each appraisal must reflect a credible estimate of value and will clearly state the following:
After completing the report, what guarantee is there that the final number is veritable?(Back to top) In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers?(Back to top) Most of the time, appraisers are hired by mortgage lenders to estimate the value of property involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Tejas Appraisal Company get the information used to estimate values in Kendall County or other areas?(Back to top) One of the most important things an appraiser does is to compile property data. Data can be divided into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is gathered from a numerous sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely have to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
How can a licensed appraiser help me?(Back to top) An appraisal is a valuable tool anytime your home's value is relevant to a financial decision. If you're selling your home, an appraisal helps you set the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Tejas Appraisal Company is the best documentation to ensure assets are divided properly. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI is an acronym for Private Mortgage Insurance. This added plan guards the lender in case a borrower defaults on the loan and the market price of the house is less than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Does the appraiser need anything from me in advance?(Back to top) We begin with an inspection of the home. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general condition of its features. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help expedite our work plus ensure a more accurate report, try if possible to have the following items:
What does "Market Value" mean?(Back to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Back to top) In most real estate transactions, the appraisal is ordered by the lender. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is certainly entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.
The exception to this rule is when a home owner hires an appraiser directly. In these cases, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
How can I get the most ROI out of home improvements?(Back to top) The added value of a particular amenity truly depends on the local market. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
As a rule, the most value returned from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms were second, returning 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.